Diminishing returns: Russia’s participation in the World Trade Organization

Abstract

Russia’s 2012 accession to the World Trade Organization was widely expected to spur economic growth and modernization, by helping the country abandon its import-substitution model and fully integrate into the global economy. However, thus far, Russia’s compliance record with its WTO commitments has been mixed, and WTO membership has given Russia limited economic benefits and few political gains. In analyzing why, this article uses neoclassical realism as a framework for assessing Russia’s behavior in WTO trade disputes and negotiations. During Russia’s economic recession, the regime of President Vladimir Putin advanced protectionist policies and maintained statist control over the heights of the economy, while using rhetorical strategies to counter accusations from Western powers that Russia had violated WTO norms. Russia’s struggling economy weakened its status as a global economic power, and it was viewed as unqualified to sit among the core group of negotiators in the WTO.

Keywords:

• Russia
• World Trade Organization
• Russia–West relations
• Russian foreign policy
• neoclassical realism

Acknowledgments

I would like to thank the Davis Center for Russian and Eurasian Studies, Harvard University, for granting me access to Widener Library, where I conducted research for this article. Many thanks as well to Professor Harley Balzer of Georgetown University for his helpful comments on an earlier version of this paper, which I presented at the 2015 Annual Convention of the Association for Slavic, East European, and Eurasian Studies. Lastly, I am grateful for the helpful comments made by the anonymous reviewer and by Professor Timothy Frye.

Notes

1. The WTO has a detailed process for settling trade disputes. According to its website, “A dispute arises when one country adopts a trade policy measure or takes some action that one or more fellow-WTO members considers to be breaking the WTO agreements, or to be a failure to live up to obligations. A third group of countries can declare that they have an interest in the case and enjoy some rights” (Understanding 2016). If a WTO member fails to settle its dispute through consultation with another member or members within 60 days, it may authorize the creation of a panel of three to five experts, who then review and issue reports on the case (unless the WTO membership rejects by consensus a panel’s formation). The WTO’s rules “allow for a challenged country to block the initial request for a panel, a move often used to buy time and construct a better defense. Panels are then automatically formed upon the second request of the complainant” (Lawson 2015). The process can take over a year. The so-called Dispute Settlement Body (DSB), composed of all WTO members, may reject by consensus a ruling or recommendation by a panel, and disputing parties may appeal any decision if a legal interpretation is in dispute. However, despite the DSB’s ability to authorize retaliation when a WTO member does not comply with a ruling, in practice WTO members do not universally comply with its most authoritative judgments (Neuwirth and Svetlicinii 2016). Overall, the WTO tends to act as a “body that scrutinizes the way in which any governmental decisions that have effects on trade are reached” rather than a “final arbiter of scientific truths in tightly contested disputes” (Collins 2015, 123).

2. Although Russia and the US have not initiated any WTO trade disputes against one another, such an action was almost taken at least once. In November 2014, Russia objected to the US’s decision to end a bilateral agreement that had lowered import duties on Russian flat-rolled steel producers, on the grounds that the US was in breach of WTO rules. However, Russia did not request a WTO ruling, which may indicate that the two countries’ negotiators assumed they could resolve their differences outside the WTO framework (Russia Says 2014).